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Oil briefly fell below $55 a barrel in London for the first time in a year as an U.S. Federal Reserve interest-rate hike stoked demand fears just as markets contend with excess supply.

Brent futures slid as much as 4.5% to the lowest since September 2017. Traders are avoiding risk assets as Chairman Jerome Powell failed to quell concerns the Fed’s policy will choke global growth, which also drove down equities. Crude inventories at a key US storage hub rose to the highest level since January, adding to speculation OPEC’s output cuts will be undermined by shale supplies.

Crude’s set for its worst quarterly drop in four years despite an accord between OPEC and its allies to cut 1.2 million barrels a day of production from January. While Saudi Arabia’s Energy Minister Khalid Al-Falih said he’s certain the deal will be extended in April, the assurance coming even before the pact has gone into effect only highlighted the prevailing anxiety in the market. Meanwhile, global investors are concerned the Fed isn’t finished raising rates.

“Some of the elements in oil’s bullish story have fallen apart,” said Giovanni Staunovo, an analyst at UBS Group AG in Zurich. “US production is higher than expected, concerns over spare capacity didn’t materialize, and the OPEC+ cuts don’t start until January. The correction in equities triggered by the Fed didn’t help either.”

Brent for February settlement dropped as much as $2.60 to $54.64 a barrel on London’s ICE Futures Europe exchange, and traded at $54.91 a barrel at 10:53 local time. The contract rose 1.7% on Wednesday. The global benchmark crude traded at an $8.71 premium to West Texas Intermediate.

WTI for February delivery lost as much as $2.35 to $45.82 a barrel on the New York Mercantile Exchange. The January contract expired on Wednesday after gaining 96 cents to $47.20. Total volume traded Thursday was about 55% above the 100-day average.

Stockpiles at Cushing rose for a fourth consecutive week, increasing by 1.09 million barrels last week, Energy Information Administration data showed on Wednesday. While nationwide inventories shrank by 497 000 barrels, the drop was smaller than a 2.5 million-barrel decrease expected in a Bloomberg survey of traders.

Geopolitics, Interest Rates

On Wednesday, Saudi Minister Al-Falih said the current price dip isn’t based on supply and demand of oil, but stems in part from factors including geopolitics, US interest rates, the strength of the American currency and investor speculation. Still, he added that the group will “need more time” for production curbs to balance the market.

“It’s a disaster for OPEC,” said Eugen Weinberg, head of commodities research at Commerzbank AG in Frankfurt. “It will definitely take time for fundamentals to improve.”

In America, policy makers scaled back the number of rate increases they expect next year to two, from three in September, according to their median forecast. That’s still more than what investors expect. Powell repeatedly called the outlook for next year “positive,” though the central bank lowered the forecast for growth in 2019 to 2.3% from 2.5% in September.

Other oil-market news OPEC’s bold strategy to revive oil markets proved a surprise success last year, but the sequel they’ve unveiled for 2019 is getting a cooler reception. Russian Deputy Prime Minister Dmitry Kozak and Energy Minister Alexander Novak discussed the country’s domestic fuel market and crude output with oil executives at a meeting in Moscow, according to two people familiar with the matter.